Case Note

Date01 December 2015
Published date01 December 2015

PROPOSED IMPROVEMENTS TO THE DIVISION OF PARTIES' BENEFICIAL INTERESTS BEYOND THE WOMEN'S CHARTER

Chan Yuen Lan v See Fong Mun

[2014] 3 SLR 1048

In this case, the Singapore Court of Appeal had the opportunity to consider its approach towards ascertaining the parties' beneficial interests under the common law. It took the opportunity to revist its earlier decision of Lau Siew Kim v Teo Guan Chye Terence[2008] 2 SLR(R) 108 and establish an approach for future cases. It is submitted that the Court of Appeal's approach could have gone further to first, establish the common intention constructive trust analysis as the starting point for ascertaining beneficial interests under the common law, second, reform the presumption of advancement and third, pave the way for a greater role to be played by non-financial contributions in ascertaining the parties' beneficial interests.

I. Introduction

1 Presently, the division of assets (primarily the home) between cohabitants and married couples in Singapore are done under separate regimes. Upon a divorce, the court has the power to order a “just and equitable” division of the matrimonial assets under s 112(1) of the Women's Charter1 (“the WC”). In most cases, the home falls within the definition of matrimonial property as per s 112(1) of the WC. The parties' interest in the home is then apportioned under s 112. However where cohabitants are unmarried and go their separate ways, this is done via common law. This was explicitly observed by V K Rajah JA in

Chan Yuen Lan v See Fong Mun2 (“Chan Yuen Lan”), also the latest case on the common law position in ascertaining the parties' beneficial interests in property, dealing specifically with homes.3

2 In Chan Yuen Lan, Rajah JA declined to follow the majority approach in Stack v Dowden4 (“Stack”), on the basis that: (a) there would be an increased risk of litigation, (b) it would be difficult to identify which property falls within the domestic context and (c) it would be difficult for lawyers to advise their clients on the likelihood of a successful claim.5 He also revisited his previous decision in Lau Siew Kim v Teo Guan Chye Terence6 (“Lau Siew Kim”) on ascertaining beneficial interests under the common law and held that the resulting trust analysis was based on the lack-of-intention analysis proffered by Prof Robert Chambers.7

3 This note first seeks to comment on three issues arising from Chan Yuen Lan, (a) the use of the common intention constructive trust (“CICT”) analysis versus the use of the resulting trust analysis, (b) the continued application of the presumption of advancement (“POA”) in countering the presumption of resulting trust and (c) the role of non-financial contributions in the ascertainment of the parties' beneficial interests. Next, it will be suggested that despite its flaws, the majority approach in Stack as qualified by Jones v Kernott8 (“Jones”) could still present a better approach as opposed to the Chan Yuen Lan approach. This is especially so because lifestyles beyond marital bonds are becoming increasingly tolerated or accepted and the common law will correspondingly be used increasingly to adjudicate between these parties going their separate ways.

II. Facts in Chan Yuen Lan

4 The parties to the litigation were Mr See Fong Mun (“Mr See”) and Mdm Chan Yuen Lan (“Mdm Chan”). They were married in 1957.9 During the course of the parties' marriage, Mr See had an affair with a mistress10 and at the time of the appeal, he was still living with the mistress.11

5 In late 1983, the parties bought a property at 24 Chancery Lane (“the Property”) for $1.78m.12 This was placed in Mdm Chan's sole name13 and financed by $290,000 from Mdm Chan, inter alia. With respect to the $290,000, Mr See contended that this was an interest-free loan that was provided by Mdm Chan and he had repaid the loaned sum to her.14 He submitted that she had held the Property absolutely because at the time of purchase, she had wanted to hold a property in her name so she could boast to her friends about it.15 Mdm Chan however contended that it was agreed that she would be the absolute owner of the Property and the $290,000 was her contribution towards the Property's purchase price.16 The parties also disagreed on the applicability of the POA in respect of Mr See's beneficial interest. Mdm Chan's case was that the POA applied in her favour17 while Mr See's case was that the POA did not apply because there was documentary evidence showing that his intention was otherwise.18

6 The arguments were significant because they had material bearings on the outcome of the case. If the $290,000 was indeed repaid to Mdm Chan as alleged by Mr See, Mdm Chan would have no beneficial interest in the Property. If the POA applied in favour of Mdm Chan, Mr See's beneficial interest in the Property would be advanced to Mdm Chan. In the High Court, the trial judge held that Mdm Chan's $290,000 contribution was a loan that had been repaid in full by Mr See19 while Mr See had successfully rebutted the POA because there was no convincing reason why he would give such a large house to Mdm Chan with whom he was married to just in name.20 Lastly, the trial judge opined that the CICT analysis was a sounder solution than the resulting trust analysis where the common intentions of the parties had been proven.21 Left with next to nothing, Mdm Chan appealed.

III. Court of Appeal proceedings

7 Madam Chan's case on appeal rested on two points: that the trial judge erred in assessing the credibility of the witnesses in assessing the Property's beneficial ownership and that the trial judge had wrongly rebutted the POA.22 Mr See's position was that the trial judge's findings

on the $290,000 and the POA was correct and therefore he (a) paid fully for the Property and (b) had every intention to retain his beneficial interest in it.23 As such, the POA was rebutted and a resulting trust arose in his favour.

8 In its decision, the Court of Appeal (“CA”) held that the trial judge erred in respect of the $290,000. It found that since it was undisputed that the $290,000 initially belonged to Mdm Chan, the onus was on Mr See to prove that it was a loan.24 Since insufficient evidence was provided by him, he had failed to prove his case and the $290,000 was held to be Mdm Chan's contribution to the Property's purchase price.25 Given this, there was a presumption that Mdm Chan held the remainder of the beneficial interest in the Property on a resulting trust for Mr See.26 The question then was whether Mr See had intended to benefit Mdm Chan by his contributions to the Property's purchase price.

9 On this second issue, the trial judge was upheld. The CA found that Mdm Chan had executed a power of attorney allowing Mr See and their son to “take charge of, manage and improve [her] property”.27 If the Property was a gift to her, the CA was unconvinced why she allowed Mr See to exercise control over it.28 Also, it was unconvincing why Mr See who was nearing retirement and who had just begun an affair at that time would make such a large gift to Mdm Chan, with whom his marriage existed merely in name.29 Therefore Mr See had no intention to benefit Mdm Chan with his beneficial interest in the Property.

10 The above was sufficient to dispose of the appeal. However the CA's exposé on the CICT and resulting trust analyses towards ascertaining the beneficial interests of the parties in such disputes, its retention of the POA and its rejection of non-financial contributions in ascertaining the parties' beneficial interests were all highly significant. The CA took the opportunity to state broadly the future approach in ascertaining the beneficial interest in respect of property ownership which is as follows:

(a) First, is there sufficient evidence of the parties' respective financial contributions to the purchase price of the property? If yes, parties will be presumed to hold the beneficial interest in proportion to their respective contributions to the

purchase price. If no, parties are presumed to hold the beneficial interest in the same manner as the legal interest.

(b) Whether the answer to (a) is yes or no, is there sufficient evidence of an express or inferred common intention that the parties should hold the beneficial interest in the property in a proportion that is different from their respective financial contributions? If yes, they will hold their interests in accordance with this common intention, which the court will not impute to them.

(c) If the answer to (a) and (b) is no, parties will hold the beneficial interest in the property in the same manner as the legal interest.

(d) If the answer to (a) is yes but to (b) is no, is there still sufficient evidence that the party who paid a larger part of the purchase price of the property intended to benefit the other party with the entire amount which he or she paid? If yes, X would be considered to make a gift to Y of that larger sum and Y would be entitled to the entire beneficial interest.

(e) If the answer to (d) is no, does the presumption of advancement still operate to rebut the presumption of resulting trust in (a)? If yes, then there will be no resulting trust on the facts where the property is registered in Y's sole name and the parties will hold the beneficial interest jointly if the property is jointly registered in their names. If no, the parties will hold the beneficial interest in the property in proportion to their respective contributions to the purchase price.

(f) Regardless of the situation when the property was acquired, is there sufficient and compelling evidence of a later express or inferred common intention that the parties should hold the beneficial interset in a proportion different from the beneficial interest held at the time of acquisition of the property? If yes, the beneficial interest will be held according to this later common intention. If no, parties will hold the...

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